Dodgy umbrella company tax schemes investigated

A High Court has ordered two accountancy firms into liquidation after an investigation was conducted by the Insolvency Service.

Bradbury & Co and Sunday Solutions were closed down in the
interests of the public and freelancers after their
tax schemes were investigated.

The firms' clients were mainly
IT contractors who were offered limited liability partnerships.
Under an LLP, the firm keeps tax liabilities until tax payments are
due. The firms handled an estimated £80m for their 1,500 clients
but the insolvency service said that no money was released to
settle tax liabilities.

The insolvency service also found that more than 100 bank
accounts were opened on behalf of partnerships but the LLPs were
not registered with Companies House. It also discovered that
clients were being charged excessive fees for the service which
sometimes amounted to up to 30% of earnings.

Clients made numerous complaints to the companies but no action
was taken. Disgruntled former clients formed an action group
SundayBradbury. The directors of the accountancy firms refused to
co-operate fully throughout the Insolvency Service
investigation.

The companies did not oppose the winding up order but they also
did not admit the allegations made against them. Ms Registrar
Barber explained that winding up the two firms was in the public
interest.

The investigations supervisor of the Insolvency Service, Chris
Mayhew, warned freelancers thinking of making use of an
umbrella tax scheme to ensure the company they choose is
reliable.